IT Supply Chain Management

Enterprise Business Systems

Chapter 8 Enterprise Business Systems 2

Supply Chain Management (SCM)

Fundamentally, supply chain management helps a companyGet the right productsTo the right placeAt the right time In the proper quantityAt an acceptable cost


Goals of SCM The goal of SCM is to efficiently

Forecast demandControl inventoryEnhance relationships with customers,

suppliers, distributors, and othersReceive feedback on the status of every link

in the supply chain


What is a Supply Chain? The interrelationships

With suppliers, customers, distributors, and other businesses

Needed to design, build, and sell a product Each supply chain process should add value to

the products or services a company producesFrequently called a value chain


Supply Chain Life Cycle


Electronic Data Interchange One of the earliest uses of information

technology for supply chain management The electronic exchange of business transaction

documents between supply chain trading partners

The almost complete automation of an e-commerce supply chain process

Many transactions occur over the Internet, using secure virtual private networks


Typical EDI Activities


Roles and Activities of SCM in Business


Planning & Execution Functions of SCM Planning

Supply chain designCollaborative demand and supply planning

ExecutionMaterials managementCollaborative manufacturingCollaborative fulfillmentSupply chain event managementSupply chain performance management


Benefits and Challenges of SCM Key Benefits

Faster, more accurate order processingReductions in inventory levelsQuicker times to marketLower transaction and materials costsStrategic relationships with supplier


Goals and Objectives of SCM


Benefits and Challenges of SCM Key Challenges

Lack of demand planning knowledge, tools, and guidelines

Inaccurate data provided by other information systems

Lack of collaboration among marketing, production, and inventory management

SCM tools are immature, incomplete, and hard to implement


Trends in SCM


ERP: The Business Backbone ERP is a cross-functional enterprise backbone

that integrates and automates processes withinManufacturingLogisticsDistributionAccountingFinanceHuman resources


What is ERP? Enterprise resource planning is a cross-

functional enterprise system An integrated suite of software modulesSupports basic internal business processesFacilitates business, supplier, and customer

information flows


ERP Application Components


ERP Process and Information Flows


Benefits and Challenges of ERP

ERP Business BenefitsQuality and efficiencyDecreased costsDecision supportEnterprise agility

ERP CostsRisks and costs are considerableHardware and software are a small part

of total costsFailure can cripple or kill a business


Costs of Implementing a New ERP


Causes of ERP Failures Most common causes of ERP failure

Under-estimating the complexity of planning, development, training

Failure to involve affected employees in planning and development

Trying to do too much too fast Insufficient training Insufficient data conversion and testingOver-reliance on ERP vendor or consultants


Trends in ERP


Customer Relationship Management A customer-centric focus

Customer relationships have become a company’s most valued asset

Every company’s strategy should be to find and retain the most profitable customers possible


What is CRM? Managing the full range of the customer

relationship involvesProviding customer-facing employees with a

single, complete view of every customer at every touch point and across all channels

Providing the customer with a single, complete view of the company and its extended channels

CRM uses IT to create a cross-functional enterprise system that integrates and automates many of the customer-serving processes


Application Clusters in CRM


Contact and Account Management CRM helps sales, marketing, and service

professionals capture and track relevant data aboutEvery past and planned contact with

prospects and customersOther business and life cycle events of

customers Data are captured through customer touchpoints

Telephone, fax, e-mailWebsites, retail stores, kiosksPersonal contact


Sales A CRM system provides sales reps with the

tools and data resources they need toSupport and manage their sales activitiesOptimize cross- and up-selling

CRM also provides the means to check on a customer’s account status and history before scheduling a sales call


Marketing and Fulfillment CRM systems help with direct marketing

campaigns by automatic such tasks asQualifying leads for targeted marketingScheduling and tracking mailingsCapturing and managing responsesAnalyzing the business value of the campaignFulfilling responses and requests


Customer Service and Support A CRM system gives service reps real-time

access to the same database used by sales and marketingRequests for service are created, assigned,

and managedCall center software routes calls to agentsHelp desk software provides service data

and suggestions for solving problems Web-based self-service enables customers to

access personalized support information


Retention and Loyalty Programs It costs 6 times more to sell to a new customer An unhappy customer will tell 8-10 others Boosting customer retention by 5 percent can boost profits

by 85 percent The odds of selling to an existing customer are 50 percent;

a new one 15 percent About 70 percent of customers will do business with the

company again if a problem is quickly taken care of Enhancing and optimizing customer retention and loyalty

is a primary objective of CRM Identify, reward, and market to the most loyal

and profitable customers Evaluate targeted marketing and relationship programs


The Three Phases of CRM


Benefits of CRM Benefits of CRM

Identify and target the best customersReal-time customization and personalization

of products and servicesTrack when and how a customer contacts

the companyProvide a consistent customer experienceProvide superior service and support across

all customer contact points


CRM Failures Business benefits of CRM are not guaranteed

50 percent of CRM projects did not produce promised results

20 percent damaged customer relationships Reasons for failure

Lack of understanding and preparationNot solving business process problems firstNo participation on part of business

stakeholders involved


Trends in CRM Operational CRM

Supports customer interaction with greater convenience through a variety of channels

Synchronizes customer interactions consistently across all channels

Makes the company easier to do business with Analytical CRM

Extracts in-depth customer history, preferences, and profitability from databases

Allows prediction of customer value and behavior Allows forecast of demand Helps tailor information and offers to customer needs


Trends in CRM Collaborative CRM

Easy collaboration with customers, suppliers, and partners Improves efficiency and integration throughout supply

chain Greater responsiveness to customer needs through

outside sourcing of products and services

Portal-based CRM Provides users with tools and information that fit their

needs Empowers employees to respond to customer demands

more quickly Helps reps become truly customer-faced Provides instant access to all internal and external

customer information

IT Supply Chain Management

Business

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